Founder at Stock Spin-off Investing, Stock Spin-Off Investing

Richard Howe

Founder at Stock Spin-off Investing

Stock Spin-Off Investing

Generate attractive returns by taking advantage of inefficiencies in the stock spin-off market.

Stock Spin-offs

Event-Driven

<ul><li>I sold Garrett Motion (GTX). Nothing against GTX as the stock still looks cheap at 6.6x FCF and 6.6x EBITDA.</li><li>But it’s been incredibly strong, and I don’t quite understand why.</li><li>Further, PE owners Oaktree, Centerbridge and Cyrus, were planning to sell 17MM shares in a secondary offering (looks like the secondary is being pulled).</li></ul>

I sold Garrett Motion (GTX). Nothing against GTX as the stock still looks cheap at 6.6x FCF and 6.6x EBITDA.But it’s been incredibly strong, and I don’t quite understand why.Further, PE owners Oaktree, Centerbridge and Cyrus, were planning to sell 17MM shares in a secondary offering (looks like the secondary is being pulled).

Weekly Update (GTX, HAVAS, LION, SNRE, MDT)

<ul><li>I’m closing my Garrett Motion (GTX) recommendation.</li><li>I’ve been trying to understand why the stock has been so strong since reporting earnings, and I can’t figure it out.</li><li>The quarter was fine but not exceptional. The story remains the same. </li></ul>

I’m closing my Garrett Motion (GTX) recommendation.I’ve been trying to understand why the stock has been so strong since reporting earnings, and I can’t figure it out.The quarter was fine but not exceptional. The story remains the same. 

Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

BWS provides independent stock specific research focused on companies with distinct value that are going through a special situation where there is a tangible catalyst not priced in. The catalyst can be anything from new product, restructuring, M&A, management change, change in business strategy, etc. BWS’s focus is to understand the change and evaluate the potential return for investors.

BWS utilizes a self formed proprietary approach in discovering stocks by putting great emphasis on deep research. BWS does generate short recommendations following a similar criteria.

Equity Bottom-Up

<ul>
<li>GTX reported soft third quarter results in line with the slowdown the automotive industry continues to experience. </li>
<li>Auto OEMs have faced product mix changes and a highly competitive marketplace where the consumer is taking their time in making purchase decisions.   </li>
<li>Investments in new products should lead to sales diversification by late 2025. </li>
</ul>


GTX reported soft third quarter results in line with the slowdown the automotive industry continues to experience. 
Auto OEMs have faced product mix changes and a highly competitive marketplace where the consumer is taking their time in making purchase decisions.   
Investments in new products should lead to sales diversification by late 2025. 


<ul>
<li>When GTX reported Q2 results the global auto industry was going through a digestion period.  Many of those trends have persisted in the third quarter. </li>
<li>The state of the global automotive market remains unclear with expectations at the beginning of the year set for growth and now it could be flat to slightly down.  </li>
<li>GTX should manage through the third quarter with minimal impact to the business and a stronger Euro further insulating the earnings from downward pressure.</li>
</ul>


When GTX reported Q2 results the global auto industry was going through a digestion period.  Many of those trends have persisted in the third quarter. 
The state of the global automotive market remains unclear with expectations at the beginning of the year set for growth and now it could be flat to slightly down.  
GTX should manage through the third quarter with minimal impact to the business and a stronger Euro further insulating the earnings from downward pressure.


<ul>
<li>GTX reported Q2 results missing our estimates as demand for turbochargers softened in quarter. The magnitude of the sales miss was amplified by deflationary cost pass throughs.  </li>
<li>GTX was successful in maneuvering its cost structure at the beginning 2024 resulting in gross margin exceeding our estimate and adjusted EBITDA declining by a significantly smaller amount than sales. </li>
<li>We were already towards the low end of GTX’s previous guidance range anticipating uncertainty. Our adjustments to 2024 and 2025 adjusted EBITDA estimates are minimal.</li>
</ul>


GTX reported Q2 results missing our estimates as demand for turbochargers softened in quarter. The magnitude of the sales miss was amplified by deflationary cost pass throughs.  
GTX was successful in maneuvering its cost structure at the beginning 2024 resulting in gross margin exceeding our estimate and adjusted EBITDA declining by a significantly smaller amount than sales. 
We were already towards the low end of GTX’s previous guidance range anticipating uncertainty. Our adjustments to 2024 and 2025 adjusted EBITDA estimates are minimal.


Switzerland

Garrett Motion Inc. operates as an automobile technology provider. The Company offers turbocharging, electric boosting, and automotive software solutions. Garrett Motion serves customers worldwide.

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Garrett Motion (GTX US)

Weekly Update (GTX, HAVAS, LION, SNRE, MDT)

I sold Garrett Motion (GTX). Nothing against GTX as the stock still looks cheap at 6.6x FCF and 6.6x EBITDA. But it’s been incredibly strong, and I...

Richard Howe

[Alert] Sell Garrett Motion

I’m closing my Garrett Motion (GTX) recommendation. I’ve been trying to understand why the stock has been so strong since reporting earnings...

Richard Howe

GTX: Turbo Thru the Trough

The surprise in the results was the trading activity that occurred the night prior to third quarter numbers. We believe that trading activity could...

BWS Financial Inc

GTX: Previewing for Free Cash Flow

Q3 is not expected to show much change from the second quarter as automakers adjusted their competitive strategies. Q3 is seasonally a slow period...

BWS Financial Inc

GTX: Value from Impatience

We had already been on the low end of the guidance range anticipating uncertainty. GTX's ability to gross margin is being penalized due to investor...

BWS Financial Inc

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